Some scary stuff from Reason:

"Privacy laws allow high-risk insurees to lie about their health in order to get more money. This means that healthier customers will have to be charged more to pay for their high-risk counterparts. This situation can set off an adverse selection spiral in which low-risk clients flee the higher premiums and high-risk clients flock to buy the insurance. As premiums rise to cover the unhealthy clients, fewer and fewer people can afford insurance.

"Are purchasers of insurance really all that savvy? Absolutely. In 1992, New York State passed a "community rating" law in an effort to bring down insurance prices. The New York law forbade insurers from offering lower rates to companies with younger, healthier employees--the effect of which was to increase rates for those workers. Faced with higher rates, large numbers of younger workers simply dropped their coverage, leaving relatively unhealthy oldsters to fend for themselves. The result was higher rates and fewer people covered by health insurance. The same problem also plagued recent attempts to do the same with the Federal Employees Health Benefit Plan and the California Public Employees Retirement System."